Business Rate Supplements Bill

My Lords, I, too, thank the Minister for his helpful introduction of Motion A standing in his name. I support the noble Lord, Lord Tope, in his Motion. Like the noble Lord, Lord Tope, I place on record my interests in these matters as a director of three companies in the north-east of England that pay business rates. I have read the interesting debate that was held in the other place on this issue. A number of new points were raised and this revised amendment has been brought forward. That is all very welcome. However, a couple of key points of concern remain. I put these forward in support of the amendment and for the Minister to respond to when he replies. First, this measure creates an anomaly. The business rate supplements are analogous to the business improvement districts, which have been championed and advocated by my noble friend Lord Jenkin of Roding. In the business improvement districts, there are ballots on each investment. In fact, an integral part of the case being made is that there is going to be a partnership, which would be undermined if a scheme were to be imposed on a business community that was not welcoming of it. Therefore, we are breaking that sprit of partnership in this business rate supplement. We are introducing an anomaly, which may have ramifications when we come to consider the sections that relate to business rate supplement and business improvement districts. Secondly, some of the language that is being used here and, indeed, in the other place is concerning, because it talks about business not making a significant contribution and having a veto. However, one-third of the cost of a capital project could be a very significant sum—perhaps £10 million, £20 million or £100 million. On Crossrail, the potential contribution is a few billion pounds. The sums could be very significant. It behoves any successful scheme to engage the business community when such a large amount of money is being considered. The notion that a scheme might be pitched by the local authority so that it comes in just below the one-third threshold to avoid the difficulty of having to go through a ballot—a concern quite rightly raised in Committee by my noble friend Lord Cathcart—remains a real concern. The next point is similar. We are looking at getting business on side, but it is clear that a number of large business organisations, such as the CBI, have expressed serious concern. We are talking about a ballot of a cohort of businesses on which this investment measure, which is designed to improve their lives, may have an impact. That begs the question. Which business on earth would vote against something that was designed to improve their situation and improve economic regeneration? It has to be very much in their interest. Why would a levying authority not want to have the mandate of having business on side? We are not talking about every business. That is an important point to get on the record. We are talking about a relatively small group. The threshold for those liable to the business rate supplement is a £50,000 rateable value. In terms of square footage and, possibly, the number of employees, a business with a £50,000 rateable value is a pretty significant one. This will probably disproportionately impact a lot of retail businesses. We are not talking about tens of thousands. Therefore, some of the arguments that the Minister has made about the difficulties of undertaking the ballot may not arise. However, tens and hundreds of businesses in an area will be paying a significant amount of money to improve that area. Our argument is that they should be considered. The Government started from a position of saying, "No, local authorities can be entirely trusted with this responsibility; there is no need to put any obligations on them at all". However, as a result of the Committee and Report stages and scrutiny in the other place, the Government have moved a long way to the position that we have been arguing for. In their amendments in lieu, they say that there should be an involvement. In other words, you cannot just walk away from a ballot; you have to give a reason. They say that there will be a statutory responsibility to engage with local businesses. That is a very helpful point. The levying authority must also provide assurance that it is not levying a sum that is in addition to. That is an important check of the ballot. One of the great concerns among those of us on this side of the House is that, far from being dreamt up by a great enterprising department as a means of finding new ways of regenerating our inner-city and urban areas, this scheme has been generated by the Treasury as a means of finding new ways of raising money. The principle set out in Clause 3 deals with additionality and says that, in addition, funds cannot be used on housing, social services, education services, services for children, health services and so on. That further restricts the levying authorities’ room for manoeuvre. So the Government have travelled a very long way as a result of the scrutiny that both Houses have brought to this issue. However, they have not moved far enough. That is why Amendment A1 is required. It would provide an additional safeguard. Most important, it would provide a way of involving businesses and motivating them to engage in partnership with local authorities to promote their area. I should think that that will be widely welcomed.